Service apartment industry spreading wings in Port City

According to industry experts, there are hordes of hotels and lodges in the city but there are only three to four established mid-sized players offering decent service apartment facilities in the range of Rs 1,500-3,000 per room per night.Swati Rathor | TNN | August 09, 2015, 09:16 IST

VISAKHAPATNAM: With the Port City, which holds the distinction of being the sole cosmopolitan and established city in Andhra Pradesh, fast emerging as a hot business destination, the demand for quality service apartments in the city is soaring. As a result, many existing service apartment players are either consolidating their base or are on an expansion spree.

According to industry experts, there are hordes of hotels and lodges in the city but there are only three to four established mid-sized players offering decent service apartment facilities in the range of Rs 1,500-3,000 per room per night.

"After bifurcation, the overall business dropped because of the subdued sentiment. Just as we started recovering, cyclone Hudhud hit and sent demand crashing. But now the worst is over and we expect a spurt in demand as a lot of new companies are setting up shop here," said Sunil Gupta, promoter of Blue Homes, which has four properties in the city and is putting up its fifth one in the Shivaji Park area soon.

According to Anand Narla, promoter of The Pioneer, the service apartment industry is a very niche segment and still in the nascent stage in the city. "There are 30-40 small and mid-sized players, who offer bed and breakfast. Even service apartments provide the same facilities. But the difference is that service apartments are better maintained and the service is good," he said, adding that as the service apartment industry has just begun to grow in Vizag, the existing players are still focussing on improving their services.

Talking about expansion plans, he said that The Pioneer, which has its sole property comprising 35 units in Siripuram, is on the lookout for properties in areas such as Madhurawada and Kurmannapalem to cater to the upcoming IT and manufacturing units.

According to Narla, the future demand will be driven by corporates expanding their presence in the city. "Even now most of our customers are corporates, mainly from the IT and insurance sectors. They prefer service apartments as costs are lower than hotels and amenities offered as good if not better," he added.

According to an official of Classic Luxury Service Apartments, which has one property with 23 units at Kirlampudi Layout, apart from corporates, service apartments are also in great demand during the wedding season. "We also host many foreigners, who come here for short duration projects in the shipping industry," the official said.

Echoing similar sentiments, an official from Sea City Service Apartments, which offers 30 units at Shivajipalem, said they too host not just business travelers but also tourists. He pointed out that generally players in Vizag offer individual rooms and a common dining space as opposed to individual flats that the more established service apartment players offer in the metros.

While many are hopeful of brisk business in the future, CP Reddy, promoter of Falcons Nest Service Apartments, is skeptical. "After bifurcation, many things were promised. I know many industries want to invest but are not taking any decisions because the special status has not yet been granted, which would have provided them tax incentives. Once there is some clarity on this aspect and work on the smart city project moves ahead, I feel the service apartment industry will really boom," he added.

Reddy also said that growth may be slow also because the supply of hotel rooms in Vizag is more than the demand. "The difference in rates of hotel rooms and service apartments too is not wide enough to boost demand," he said.